This paper illustrates the fact that when biological materials are used for development of pharmaceuticals, the patent system may function sub-optimally and may give rise to patent “thickets” and “anti-commons” which prevent commercialization of adequate amounts of product. These circumstances include inventions based on the same biological resource, patenting of largely similar functionalities, gene patents and patents that are narrow and fragmented. As a result, in order to obtain freedom to operate, drug developers must license-in multiple patents, often from competitors. This situation gives rise to uncertainty and is prone to hold-outs. The number of players actually developing drugs is narrowed to a point of a “single player” or a “no player” scenario.

The conditions described above are examined in the context of the Pandemic Influenza Preparedness Framework, an agreement concluded in May 2011 by the World Health Organization, to facilitate availability to pharmaceutical manufacturers of influenza virus samples. Due to the fact that the Framework fails to establish an IP governance regime to control patenting activity, national patent laws apply. For the reasons explained above, their application results in sub-optimal functioning of the patent system and the inability to generate a broad based of affordable pharmaceuticals, as proposed by the Framework.

The paper proposes an alternate approach in the form of a patent pool or comparable cross licensing agreement. Requiring all recipients of biological materials to join such arrangement, would re-allocate rights to provide all players access to the technologies derived from the influenza samples. This approach would avoid patent thickets and holdouts, reduce transaction costs associated with individual licensing and avoid uncertainty regarding the ability to secure freedom to operate.